The interest rates that have been rising continuously for 3 months have become even more. Now it has reached 7.8 percent on debt. In April this rate was 6.4 percent. Almost all the banks in the country are giving home loans at this rate. The repo rate has increased by 1.40% since April. Since then the debt has become expensive. Bank officials say that the effect of RBI's decision was visible immediately. Two banks made loans expensive late at night.
Banks will decide on this in their Asset Liability Committee (ALCO) meeting. Due to this, customers will have to pay more installments than the next month. After the decision of RBI, the interest rate reached the level of August 2019. The next meeting of RBI's Monetary Policy Committee (MPC) will be held on September 28-30.
Analysts say rates will still go up at least twice this year. After that, a decision can be taken considering the level of inflation. Governor Shaktikanta Das said that the events in Taiwan will have no effect. Taiwan's contribution to India's total trade is only 0.7 percent.
Now up to 7.5% interest can be earned on deposits
The RBI increased the cash reserve ratio (CRR) in May. Due to this, 87 thousand crore rupees were withdrawn from the banks. Because of this also banks need capital. There is currently a growth of 14% in the lending of banks. It was 5.5% a year ago. That is an increase of about 3 times. The interest on short-term deposits has increased by 1.4% in the last 3 months. In such a situation, it can increase by 0.50% to 1 percent in the coming 3-4 quarters. At present, interest is available up to 6.5%.
16.2% growth forecast in the first quarter
The monetary policy meeting projected 16.2 percent GDP growth in the first quarter. It could be 6.2 percent in the second quarter, 4.1 percent in the third quarter, and 4 percent in the fourth quarter. The GDP growth rate in the current financial year is likely to be 7.2 percent. The inflation rate may be 7.1 percent in the second quarter, 6.4 in the third quarter, and 5.8% in the fourth quarter. The inflation rate for the full year is expected to be 6.7%.
Key Points of the Governor
Foreign investors are now making a comeback in the market.
Liquidity in the banking system decreased by 6.7 lakh crore in April-May
Now it has come down to Rs 3.8 lakh crore.
Crude oil may remain at $105 per barrel in the current fiscal
Global factors showing negative impact on Indian economy
Foreign direct investment (FDI) of $13.6 billion came
Facility to NRIs
RBI has allowed accepting NRI bill payments from other countries through Bharat Bill Payments. In this, utility items, education, and other such fees can be paid by NRIs in India. Senior citizens will benefit from this.
Forex reserves increased after 4 weeks of decline
Forex reserves rose by $2.4 billion to $573.9 billion in the week ended July 29, after four consecutive weeks of decline. It was $571.5 billion on June 24, while it was $642 billion in September 2021.
When does the repo rate increase and decrease?
When inflation rises, the rate is raised to reduce money in the economy. Due to the cost of loans, people reduce their expenses. This reduces inflation. When the economy is in a bad phase, to improve it, the rates are reduced so that people spend more. This was done in 2020 at the time of Corona. The rates were reduced continuously at that time.
The interest rate may increase by one more percent till January
By January, the interest rate may increase by one more percent. This will happen sharply in food and fuel prices. Sakshi Gupta, Principal Economist, HDFC Bank said, RBI may increase the repo rate by up to 5.75 percent. Central banks around the world are increasing by 75 to 100 bps (basis point).
There is a perception that the rate of 75 to 100 bps may go beyond 50 bps. RBI Deputy Governor Michael Patra said that banks have already started increasing interest on deposits. Rates on bulk deposits can now rise sharply. In the fortnight ended July 15, the growth in lending of banks stood at 12.89 percent.
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